Q: My wife and I owe $45,000 on two loans for our son's college education. The interest is 5 percent on a loan of about $33,750 and 8 percent on a loan of about $11,250. We're thinking of paying them off with a home equity loan or line of credit, which would give us a tax deduction on interest payments. I am retired and do a little consulting. My wife works part time. What do you think?

A: It doesn't seem to me that you'd save anything with this maneuver.

Currently, you probably can get a home equity line of credit charging about 6 percent, while a home equity installment loan would charge about 7.5 percent.

The line of credit is a variable rate that could rise or fall in the future, while the installment loan charges a rate fixed for the life of the loan.

Neither would save you anything on the 5 percent loan that makes up the bulk of your college debt.

With the smaller loan, you'd hardly save anything by using a home equity installment loan, merely cutting the rate from 8 percent to 7.5 percent.

By using the line of credit to cut the rate to 6 percent, you could save $225 a year. But it doesn't seem worth it given the risk that the new loan could someday charge more than 6 percent.

What about the tax deduction available on the home equity loans?

Tax deductions are more valuable to people in high tax brackets than to those in lower ones. If you were in the top federal income tax bracket charging 35 percent, every dollar you paid in interest on a home equity loan would save you 35 cents in taxes.

But if you're in, say, the 15 percent tax bracket, the tax saving is much smaller -- too small to affect your decision in this case.

Also, you may be eligible for a tax deduction on your student loan payments. For 2006, the maximum deduction is $2,500 for individuals with incomes below $50,000 or couples with incomes less than $105,000. By my calculation, your interest on these two loans was just a tad over $2,500. (See IRS Publication 970 for details.)

So I don't see much point in borrowing against your home to pay off these student loans, though you might try to scrounge up some cash to pay off the 8 percent loan early.

As I mentioned above, there's a federal income tax deduction for interest paid on qualified student loans.

For 2006 and 2007 there also is a maximum $4,000 deduction for college tuition payments.

It is available for couples earning $130,000 or less and individuals making $65,000 or less. The deduction is claimed on line 35 of the Form 1040.

Because we're dealing with education issues, it's time for my annual admonition about the importance of getting that FAFSA done ASAP.

Which means you need to do your 2006 tax return right away.

The FAFSA is the Free Application for Federal Student Aid. It is the key to getting many forms of financial aid for college. It's critical for college students and high school seniors, and can be filed anytime after Jan. 1.

Aid experts say students and parents who get the application in early have a better chance of getting aid.

And you don't want to wait until the last minute because the FAFSA takes a lot of work. There are more than 100 questions, many of which will require data from your 2006 tax return and other year-end financial statements.

The FAFSA can be done online at www.fafsa.ed.gov. High school guidance counselors, college aid offices and many libraries have paper versions.

If all the burdens of paying for college have you down, here's a piece of good news: Under rules passed last year, assets in state-sponsored Section 529 college savings plans are now considered the parents' rather than the child's.

As a result, these savings do less damage to the child's eligibility for financial aid.

Jeff Brown is a business columnist for The Philadelphia Inquirer. E-mail him at brownjphillynews.com.